Most of us have made mistakes when it comes to money—and have questioned if we should have saved a little more or spent a little less. The upside of making money mistakes is that we can learn from them, and then make sure to do things differently next time. While some of these mistakes are solely a result of bad judgment calls, others may have been the product of bad financial guidance.
Here are six examples of bad financial advice:
1. Spend Now, Worry Later
Following this piece of advice usually results in: 1. High credit card balances 2. Not enough money to pay for other financial obligations or 3. Both. It’s always a smart move to think before you spend.
2. You Need More Than One Credit Card
This is bad financial advice. If someone told you to apply for a second (or third or fourth) credit card ask yourself: “Why?” Why do you need more than one credit card? Even if your credit card has currently hit its limit, applying for a new credit card may not be the answer. You could end up in even more debt. Different credit cards have different benefits, but you don’t need them all. Keep one credit card, pay off the balance and enjoy the rewards.
3. Don’t Shop Around: That’s the Best Mortgage Rate You’ll Get
Most everything is negotiable when it comes to interest rates. Banks usually lead with their first offer, not their final offer. If your bank isn’t willing to lower their mortgage rate, then shop around until you find a rate you’re happy with.
4. It’s O.K. if Your Monthly Bills Are Late
Monthly financial obligations like your cell phone and electric bill are considered credit because you use the service all month and pay for usage at the end. These companies may report your payment history to the credit bureau if you do not pay. If your bills are late, your credit score can be negatively affected. Splitting your monthly bills in two and paying a portion with each paycheck (if you’re paid biweekly) makes the bigger expense more affordable.
5. Everyone Needs a New Car and Big House
Big. Financial. Mistake. It’s nice to have nice things, but if those things put you into debt or limit your cash flow— they probably aren’t worth it. A used car can be reliable and a new house doesn’t have to be big— it just has to be big enough. Always keep your income and budget in mind when making big purchases. You’ll be thankful you did.
6. You Can Start Saving for Retirement Later
According to Investopedia, living paycheck to paycheck is one of the worst financial mistakes you can make. If someone told you to enjoy all your money down to the last dime then they gave you bad financial advice. We all want to retire someday, so why not start saving now. The sooner you start saving for retirement, the sooner you can retire or the more money you’ll have to live off of throughout your golden years.
If you’ve received bad financial advice, and you are paying the price in the form of debt, we can help. Contact us today at 1-866-484-5373. Let’s make a plan to help achieve your goals.
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Consumer Education Services, Inc. empowers people to overcome their financial challenges and lead financially-healthy lives.
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